'Employers must pay more to attract highly skilled workers to their locations to cover those workers' higher cost of living'
High housing costs are making it increasingly difficult for Canadian workers to relocate for better job opportunities, limiting talent mobility and slowing national productivity growth, according to a report.
Specifically, a one-per-cent increase in house prices in a destination city leads to a more than one-per-cent decline in the number of people moving there, reports the Canada Mortgage and Housing Corporation (CMHC).
This trend has significant implications for employers, particularly those in major urban centres, as businesses struggle to attract and retain skilled workers.
“When choosing where to live and work, Canadians not only look at the wage increase they might get,” says Aled ab Iorwerth, deputy chief economist, CMHC. “They must be realistic about housing costs if they have to move to a new location. And they may give up on opportunities given by a new job that improves their skills and knowledge – and hence the productivity of the country – if they can't afford to cover the cost of housing after moving.”
“Similarly, employers must pay more to attract highly skilled workers to their locations to cover those workers' higher cost of living. This raises costs and lowers productivity,” he says.
In 1970, Canada had the sixth most productive economy in the Organisation of Economic Co-operation and Development (OECD). By 2060, the OECD predicts Canada will be dead last among its 38 member countries, notes Caitlin Walsh Miller via MaRS.
Previously, some hotels and resorts on Vancouver Island and elsewhere in British Columbia put temporary foreign workers up in rooms in hopes of having enough staff, according to a Pique News Magazine report. Before that, an Ontario engineering firm is offered up to $20,000 to its workers as a down payment for a new home.
High housing costs in Canada
There has been a significant decline in the number of households moving in the past three decades, according to the CMHC report.
This trend reflects many factors including population aging and technological changes, but housing costs have a role to play as well.
Rising housing rates are also making it harder for Canadians to move.
“Canadians value their home for its size, suitability, quality and location. Households judge its location on amenities in the house's neighborhood, including how close it is to their place of work and where they spend their leisure hours. Canadians trade off these various attributes, perhaps choosing a smaller-sized home to be closer to work and reduce time spent commuting,” explains ab Iorwerth.
“High housing costs make these trade-offs more difficult when looking for a job offering a higher wage or greater prospects for personal or professional growth. The better job may be in a different city or have a longer commute. So, workers may refuse to take up that offer if higher housing or commuting costs outweigh any wage increase.”
Housing impacts workers
This impacts not just those who are already in the workforce, but those hoping to get in, he says.
"The broader effect is to curtail upskilling that in turn undermines growth in one of the key drivers of productivity growth, the skills and knowledge of Canadians," says ab Iorwerth.
Even within cities, high housing costs and limited public transportation options are restricting access to jobs. CMHC notes that long commutes and expensive housing in major cities like Toronto make it harder for workers to accept jobs in different neighbourhoods.
The report also warns that high housing costs limit the availability of essential service workers, such as healthcare professionals, teachers, and retail employees, further disrupting urban economies.
"Cities should be building homes that support everyone. High housing costs that force people working in the service industry to move out undermine this whole ecosystem, imperilling economic benefits that this clustering brings about," says ab Iorwerth.
As of January 2025, the following cities in Canada have the most expensive housing markets:
- Vancouver: Vancouver remains the priciest housing market in Canada, with an average home price of approximately $1,275,672.
- Toronto: Toronto's housing market has seen significant growth, with the average home price reaching $1,067,186.
- Oakville-Milton, Ont.: This region boasts an average home price of $1,393,608, making it one of the most expensive areas in Canada.
- Mississauga, Ont.: Located adjacent to Toronto, Mississauga has an average home price of $1,184,692.
- Fraser Valley, B.C.: This area has an average home price of $1,083,393, reflecting its high housing costs.
- Markham, Ont.: Part of the Greater Toronto Area, Markham's housing market is notable, with average home prices exceeding $1.3 million.
Sources: Wowa.ca, storeys.com and savvynewcanadians.com
Housing crisis: How can employers help workers?
Employers can assist their employees and communities going through the housing crisis by providing resources and easing misconceptions, according to Eileen Fitzgerald, head of Housing Affordability Philanthropy at Wells Fargo, at a U.S. Chamber of Commerce conference.
“Proactively provide information on ... emergency rental homeownership assistance,” she says. “Facilitate financial coaching or housing counseling for employees [and] dispel myths on homeownership. [Find out] how you [can] increase supply with your zoning reform, local trust funds, tax credit density, [and] bonuses. Make it known that having affordable housing … nearby is really critical for your organization.”
How to help workers with high cost of housing:
Employer-Assisted Housing (EAH) programs: These initiatives provide financial support to employees for housing-related expenses. Assistance can include down payment grants or forgivable loans, homeownership counseling, and rental subsidies. For example, some employers offer forgivable loans for down payments, contingent on the employee remaining with the company for a specified period.
Down payment assistance: Employers can offer funds to help employees with down payments and closing costs when purchasing a home. This assistance is often structured as a forgivable loan, provided the employee remains with the company for a certain duration. Such programs can be particularly effective in competitive housing markets.
Shared equity or ownership programs: Employers can invest in housing and offer employees the opportunity to purchase homes at reduced rates, often through shared equity arrangements. This not only aids employees in acquiring property but also fosters long-term commitment to the company.
Advocacy for affordable housing: Companies can collaborate with local governments and organizations to support the development of affordable housing in the community. By participating in or funding such initiatives, employers contribute to broader solutions that benefit both employees and the local economy.
Financial counseling and education: Offering workshops or resources on financial planning, budgeting, and homeownership can empower employees to make informed decisions about their housing options. This support can enhance employees' financial well-being and readiness for homeownership.
Sources: National Housing Conference, U.S. News, Local Housing Solutions, Harvard Kennedy School
